Archives for November 2016

Gryphon Closes Fund IV

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Gryphon Investors has held a final closing of Gryphon Partners IV, LP at its hard cap of $1.1 billion. The new fund was oversubscribed and exceeded its original target of $600 million.

“We greatly appreciate the enthusiastic support we received from our existing and new investors. The LP market’s confirmation of Gryphon’s unique integration of specialized deal and operating professionals from investment origination through exit to generate substantial alpha on a consistent basis was especially gratifying,” said David Andrews, Gryphon’s Founder and CEO.

Investors in the new fund include domestic and international pension funds, insurance companies, asset managers, foundations, and high net worth families. Approximately 80% of the institutional investors from Gryphon’s prior fund re-upped in Gryphon IV at an average of more than twice their prior commitments. Gryphon’s third fund raised $415 million in 2006.

“Achieving such a successful fundraise, while also completing five new platform investments totaling over 40% of Gryphon IV’s capital and multiple substantial exits, is especially rewarding,” said Nick Orum, Co-founder and President. “This achievement speaks to the unusual depth and capabilities of our team for a lower middle-market firm.”

Gryphon makes leveraged acquisitions and growth investments in middle-market companies. The firm invests from $35 million to $150 million of capital in companies with sales ranging from $50 million to $500 million. Sectors of interest include business services; consumer products and services; general industries including specialty chemicals, niche manufacturing, value-added distribution, and industrial technology; and health care.

Fund IV’s current portfolio consists of The Original Cakerie – a manufacturer of frozen desserts sold into the North American retail and foodservice sectors (acquired in December 2015); JENSEN HUGHES – a provider of fire protection engineering and consulting services (December 2015); CORA Health Services – a provider of outpatient physical therapy services (July 2016); Smile Brands – a provider of support services to dental practices (August 2016); and HEPACO – a provider of emergency and planned environmental services (August 2016).

Gryphon Investors is based in San Francisco (www.gryphoninvestors.com).

© 2016 Private Equity Professional

November 29, 2016

ORIX Adds-On to RoadSafe

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RoadSafe Traffic Systems, a portfolio company of ORIX Capital Partners and Aperion Management, has acquired Protection Services Inc. (PSI).

PSI offers traffic control and pavement marking services to private contractors, federal agencies, state transportation departments, governmental entities and utilities. PSI’s products can be purchased or rented through the company’s network of branches that serve more than 20 states. The company is based just outside of Harrisburg in Lemoyne, PA (www.protectionservices.com).

RoadSafe Traffic Systems, like PSI, is a provider of pavement marking, sign installation and traffic control services and equipment to the roadway construction, railroad and utility industries. RoadSafe is headquartered in Chicago (www.roadsafetraffic.com).

According to ORIX, the buy of PSI creates a nationwide provider of traffic control services that can serve projects of any size in over 40 states. PSI’s team of nearly 300 employees is expected to join RoadSafe, which will now number nearly 1,500 in total employment. “It was an opportune time for our two companies to join forces as we expand service offerings and add resources to support growth,” said David Meirick, President and CEO of RoadSafe. “PSI is a respected company in the industry, and their level of service—combined with their expertise—made them a great fit for RoadSafe.”

ORIX Capital Partners (ORIX CP) acquired RoadSafe in February 2016 from Falcon Investment Advisors and Aperion Management. Aperion continues to have a minority equity interest in the company in partnership with ORIX CP.

“We continue to seek strategic add-ons for RoadSafe which will complement the strong organic growth the company has experienced as a result of the incredible value, reliability and safety of its services,” said Christopher Suan, Managing Director for ORIX CP.

ORIX CP invests from $50 million to $150 million of equity capital per transaction in North America based middle-market companies.  The group will invest across a range of industries and special situations. Areas of specific interest include business services, retail, consumer, industrials, telecommunications and technology. ORIX CP is led by President and CEO Yoshiteru “Terry” Suzuki, who previously served as Co-CEO of Cerberus Japan from June 2002 to March 2015, along with Mr. Suan.

ORIX USA provided debt to back the buy of PSI. ORIX USA offers senior secured, unsecured, mezzanine, equipment leasing, and structured loan credit products to private equity, corporate, real estate, and public finance sectors. ORIX USA was founded in 1981 and is based in Dallas, with additional offices in New York, London, Paris, Frankfurt, Chicago, Los Angeles, Minneapolis, Washington DC, San Francisco, and Atlanta. ORIX USA is a wholly owned subsidiary of ORIX Corporation, a Tokyo-based, publicly traded financial services company with operations in 35 countries worldwide (www.orix.com).

Aperion Management, which has been an investor in RoadSafe since its inception in 2007, invests in small to midsize businesses valued between $15 million and $150 million. The firm is based in New York (no website found).

© 2016 Private Equity Professional

November 29, 2016

Centre Clears $1 Billion on Sale of Bellisio

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Centre Partners has agreed to sell its portfolio company Bellisio Foods to Charoen Pokphand Foods Public Company Limited (CP Foods), of Thailand, for just over $1 billion.  The transaction is expected to close by year end.

Bellisio Foods, acquired by Centre Partners in December 2011, produces more than 400 products spanning a wide variety of frozen food categories, including single and multi-serve entrees, snacks, side dishes, and specialty sauces. Bellisio markets its products under company owned brands Michelina’s and Eat!, as well as under licensed brands Boston Market, Chili’s, EatingWell, and Atkins. Bellisio is one of the largest producers of frozen entrées in the United States and has a daily production capacity of over two million meals. The company is also a co-manufacturer of private label, retail and foodservice products. Bellisio Foods operates several production facilities in Ohio, Minnesota, and California.  The company is based in Minneapolis (www.bellisiofoods.com).

During its term of ownership, Centre Partners completed several add-on acquisitions (APC Foods in June 2013 and Overhill Farms in May 2013), expanded the company’s product offerings, entered into multiple license agreements for well-established brands, and completed a number of operating improvements. The company’s revenue has more than doubled during Centre’s ownership and Bellisio has become the third-largest frozen food company in North America.

To grow value at its companies, Centre Partners provides its portfolio company management teams access to its network of experienced and proven operating executives. “We have enjoyed a highly productive partnership with Centre Partners.  Our team’s success was clearly enhanced by Centre Partners’ support and resources, and we couldn’t be more pleased with the outcome,” said Joel Conner, Bellisio’s Chairman.

“Through our partnership with Joel Conner and his management team, the successful execution of the company’s strategic initiatives has generated sustained top-line growth and tremendous enhancements to profitability,” said Bruce Pollack, a Managing Partner of Centre Partners. “Bellisio’s product portfolio, diversified customer base, and cost-effective manufacturing and distribution capabilities form an enviable platform for continued growth.”

Centre Partners invests from $20 million to $60 million in North American based middle market companies that have $50 million to $500 million in revenue and $10 million to $60 million in EBITDA.  Sectors of interest include consumer, healthcare and business services. The firm is currently investing through its sixth fund.  Centre Partners was founded in 1986 and has offices in New York and Los Angeles (www.centrepartners.com).

Morgan Stanley & Co. and Moelis & Company are acting as financial advisors to Bellisio, and Paul, Weiss, Rifkind, Wharton & Garrison is acting as legal advisor.

© 2016 Private Equity Professional

November 29, 2016

Blue Point Buys Jonathan Paul Eyewear

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Hilco Vision, a portfolio company of Blue Point Capital Partners, has acquired Jonathan Paul Eyewear. This is the fifth add-on acquisition by the company since being acquired by Blue Point in May 2014.

The acquisition of Jonathan Paul expands Hilco’s product line into sunglasses designed to fit over prescription eyewear and Jonathan Paul Fitovers is one of the leading brands in this category. The company’s products are distributed in Australia, New Zealand, the United States, Hong Kong and China. Jonathan Paul is headquartered in Austin (www.fitovers.com).

“In partnership with Blue Point, Hilco Vision continues to identify complementary products to add to its product mix and strengthens its geographic presence,” said John LeMay, a Partner with Blue Point. “The acquisition of Jonathan Paul Eyewear follows three acquisitions completed in Europe in the last 18 months, and builds on Hilco’s momentum to deliver on its promise to be a global partner to its customers worldwide.”

In September 2016, Hilco Vision acquired Optiplus and Proteye. Optiplus is a distributor of eyewear accessories, professional tools and lens-care in the Netherlands and is based northeast of Amsterdam in Leek (www.optiplus.nl). Proteye is a designer, manufacturer and distributor of prescription industrial safety eyewear, sports frames and swimming goggles. The company is based southwest of Rotterdam in Middelburg (www.proteye.nl/en/). In August 2015, Hilco Vision closed on its first two add-ons when it acquired Breitfeld & Schliekert and Lexxoo International.

As a result of these acquisitions, Hilco Vision is today a designer, manufacturer and distributor of eyewear and eye care accessories, supplies and equipment. The company supplies more than 30,000 SKUs to more than 25,000 domestic and international customers. Hilco Vision is led by its CEO Ross Brownlee, and is headquartered southwest of Boston in Plainville, MA, with additional operations in Canada, China, Europe and Australia (www.hilco.com).

“We are extremely excited about the acquisition of such an innovative brand, recognized for its originality, functionality and design,” said Mr. Brownlee.

Blue Point Capital Partners is a lower middle market private equity firm that invests in manufacturing, distribution and service businesses generating $20 million to $200 million in revenue. The firm has over $800 million in committed capital and has offices in Cleveland, Charlotte, Seattle, and Shanghai (www.bluepointcapital.com).

© 2016 Private Equity Professional

November 29, 2016

O2, Oakland and Tecum to Consolidate Counter Sector

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Private equity firms O2 Investment Partners and Oakland Standard have formed Clio Holdings to serve as a consolidator of local and regional countertop supply and fabrication businesses. Tecum Capital Partners also invested in this transaction by providing both mezzanine debt and an equity co-investment.

Clio will be used to acquire regional countertop suppliers and fabricators – a highly fragmented industry -and provide them with needed capital and expertise to upgrade, differentiate and professionalize their operations.

Clio has already completed two acquisitions and is seeking new opportunities in major metro areas across the United States. In September 2016, Clio acquired Granite Source, a stone countertop fabrication and installation business primarily serving metropolitan Washington DC, Virginia and Maryland. The company was founded by Nicholas Draper in 1999 and is based in Chantilly, VA (www.granitesource.net). The first acquisition, prior to the formation of the Clio holding company, was the buy of Princess Marble by Oakland Standard in June 2016. Princess is a fabricator and installer of natural and manufactured stone products primarily serving metropolitan Minneapolis-Saint Paul. Princess Marble was founded by Bill Jenkins in 1998 and is based south of Minneapolis in Burnsville, MN (www.princessmarblegranite.com).

Both Mr. Draper and Mr. Jenkins have joined the Clio platform, reinvested in the combined business and are actively engaged in the execution of the Clio strategy.

“We have been extremely impressed by Oakland Standard’s exhaustive market diligence and well-developed strategy,” said Todd Fink, Managing Partner of O2. “We are excited to partner with them not only for this investment, but also in future acquisitions as we grow the Clio platform together. I also want to thank Tecum Capital for their insights and flexibility in providing the financing for the transaction.”

O2 Investment Partners makes control investments of $5 million to $75 million in companies with EBITDAs from $2 million to $10 million located anywhere in the US and Canada but has a preference for the Midwest and the Great Lakes regions. Sectors of interest include niche manufacturing, niche distribution, select service businesses, and certain technology businesses. O2 Investment Partners is based in the Detroit suburb of Bloomfield Hills (www.o2investment.com).

Oakland Standard invests in US and Canada-based companies that have less than $10 million of EBITDA. Sectors of interest include niche manufacturers, value-added distributors, general industrial and automotive, and building products. The firm is based in the Detroit suburb of Birmingham (www.oaklandstandard.com).

Tecum Capital Partners, a $200 million SBIC investment fund, invests from $3 million to $15 million of subordinated debt and equity in companies that have revenues of $8 million to $100 million and EBITDA of at least $2 million. Tecum Capital Partners is based in the Pittsburgh suburb of Wexford (www.tecum.com).

© 2016 Private Equity Professional • 11-17-16

Homestead Hits Hard Cap

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Homestead Capital USA, a private equity firm investing in operating farmland in the United States, has held a final close of its second fund, Homestead Capital USA Farmland Fund II, LP, at its hard cap of $400 million. The fund had an original target of $350 million. Homestead did not use a placement agent for this fundraise. Homestead’s first fund closed in June 2015 with $173 million in capital commitments.

Limited partners in the new fund include pension funds, endowments, foundations, funds of funds, high net worth individuals and insurance companies. “We are very pleased with the support we received from returning investors and the quality of new limited partners that we were able to attract to Fund II,” said Gabe Santos, a co-founder and portfolio manager of Homestead.

According to Homestead, demand for Fund II reflected investor interest in farmland as an asset class and the opportunity it offers to produce strong risk-adjusted returns, provide portfolio diversification, and provide a hedge against inflation.

Homestead’s current portfolio includes farms across 11 states that produce 16 different crops and the firm will continue its focus on making row and permanent crop
farmland investments in the Mountain West, Pacific, Midwest and Delta regions.

“With the capital from Fund II, we plan to continue to execute on our value-add investment strategy. Because of our local presence and broad agricultural network, we are seeing many attractive investment opportunities in our targeted regions,” said Dan Little, a co-founder and portfolio manager of Homestead.

Legal services for this fundraise were provide to Homestead by Kirkland & Ellis. The Kirkland team was led by investment funds partners Matthew Dickman and Kelly Ryan. The team also included tax partners Steven Butler and Bruce Gelman; employee benefits partner Laura Bader; and investment funds partner Kevin Bettsteller and associates Lily Anne Rasel and Caleb Hanlon. Since the beginning of 2015, Kirkland has advised nearly 300 private investment fund sponsors, raising more than 400 funds representing in excess of $315 billion of capital commitments (www.kirkland.com).

Homestead Capital has offices in San Francisco, CA and Council Bluffs, IA (www.homesteadcapital.com).

© 2016 Private Equity Professional
November 17, 2016